COVID-19 has expedited trends in global real estate

The COVID-19 outbreak has accelerated and corroborated some of the emerging themes in globally

20 Mar 2020

Spotlight on APAC real estate

How has COVID-19 expedited trends?

  • The re-routing of supply chains out of China will likely pick up pace.  Focus on logistics and the high-end industrial segment.
  • Post the outbreak, tenants will review their fixed office space requirements after this involuntary experiment with mobile working.  This may not be good news for landlords.
  • Tourist-dependent strategies can be fleeting.  Investors will likely demand higher returns in the hotel and prime retail segments

The potential impact on global real estate markets

COVID-19 is an evolving scenario with varied economic impacts, depending on country, market, and sector. We've put together a special market outlook addressing the potential impact of COVID-19 on global real estate markets. What we will learn after this episode is over? What does base case and downside scenario planning look like?

Economic impact

While we cannot, at this juncture, quantify the precise economic impact of the COVID-19 on Asia, our base case scenario assumes that the epidemic will be brought under control before 2H 2020, and that an economic rebound will be experienced in the immediate aftermath. The restocking of inventory and pent up demand will support private investments and spending, while policy support should cushion further deteriorations in sentiments. Also, supply chains and flows of people and services will recover, albeit gradually.
As at 24 February 2020, Oxford Economics expects that 2020 global GDP will come in at 2.3%, down from 2.6% in 2019. Asia Pacific as a bloc will take a hit in 2020, with GDP growth falling from 4.3% in 2019 to approximately 3.8%, before staging a comeback in 2021. Obviously the downside risk to our base case is very real, and highly dependent on the magnitude and longevity of this viral outbreak, which remain rather indeterminable as yet. For now, APAC economies with higher export orientation and greater reliance on tourism will feel the impact immediately.

COVID-19: Trade and tourism dependence

4 key trends for APAC property investors

Real estate investors in APAC will be able to glean a few insights from this global health epidemic, and we believe developments in the past month have accelerated and corroborated some emerging themes in the real estate space.

What can investors expect for US and Europe real estate?

Subscribe now

Perspectives matter. Tune in to our insights.

More insights